New Guidance Note on Induction of Directors

New Guidance Note on Induction of Directors

The role of directors has come under increasing scrutiny in recent years and especially the training and skills that directors need to perform their role.

The induction process is critical in establishing the ability of a new director to actively perform their role and corporate governance responsibilities. It has long been accepted that for non-executive directors especially, the induction is essential to achieving three main aims (drawn from the Higgs Report suggestions for good practice):

  • building an understanding of the nature of the company, its business and the markets in which it operates;
  • building a link with the company’s people; and
  • building an understanding of the company’s main relationships.

All to often though, the induction process is overlooked or rushed through in the case of an executive director; with the company assuming that the executive director’s previous experience within the company or induction into their specific role will fulfil the objectives. However, executive directors need an understanding of the full breadth of the company and should be discouraged from simply focusing on their specific remit and responsibilities. This can only be achieved by a full and focused induction process.

It is therefore timely that the Institute of Chartered Secretaries have recently updated their guidance note on what should be included in the process and how it should be carried out. Although this note should only be taken as general guidance and it needs to be tailored to the specific needs of a company, it is a very useful starting point. The full guidance can be found here.


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